Fourth Stimulus Package to Reduce State and Local Tax

House Speaker Nancy Pelosi proposed Monday that the next coronavirus federal stimulus package should include a rollback of a tax that hits high earners in California and New York. 

The state and local tax, also known as SALT, could provide a cash infusion to 13 million American households that earn at least $100,000 a year in the form of a tax rebate, according to The New York Times. Per Pelosi, Congress could “retroactively undo SALT,” which blocks  households from deducting more than $10,000 a year in state and local tax expenses on their federal forms.

“We could reverse that for 2018 and 2019 so that people could refile their taxes” Pelosi told The Times. “They’d have more disposable income, which is the lifeblood of our economy, a consumer economy that we are.”

Democrats in the blue districts of Los Angeles, New York City and Chicago ran 2018 campaigns on repealing the cap in 2018 and tried to push the legislation through in 2019. Republicans, however, rejected the measure, pointing out that it would benefit high earners in high-tax states.